Today's Must Read
Southern Company (SO) Buoyed by Regulated Customer Growth
Exploration Progress, Debt Reduction to Aid Freeport (FCX)
Thursday, January 13, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Lowe's Companies, Inc. (LOW), The Southern Company (SO) and Freeport-McMoRan Inc. (FCX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Lowe's shares have gained +15.8% over the past three months, roughly in-line with the Zacks Building Products - Retail industry’s gain of +15.3%. The Zacks analyst believes that the company remains well positioned to capitalize on demand for the home improvement market backed by investments in technology, merchandise category and strength in Pro business.
Lowe’s has posted sturdy third-quarter fiscal 2021 results wherein the top and the bottom line beat the Zacks Consensus Estimate and grew year over year. Results benefited from the strong execution of strategies including the Total Home strategy. The Total Home strategy has been resonating well with Pro and DIY customers. Focus on driving productivity helped the company boost margins.
Also, sales at Lowes.com increased 25% in the fiscal third quarter. Management is committed toward enhancing the Pro offerings, expanding the company’s market share and boosting the operating margin.
Shares of Southern Company have outperformed the Zacks Utility - Electric Power industry over the past year (+14.8% vs. +6.7%). The Zacks analyst believes that by leveraging the demographics of its operating territories, as in healthy population and job growth, Southern Company has gradually increased its customer base. With good rate base growth and constructive regulation, the power supplier is expected to generate steady earnings and dividend growth in the coming years.
However, its elevated leverage, along with continued timing and cost overrun issues over its Vogtle project, are major overhangs. While the electric utility holding company’s debt-to-capitalization of 60.9% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. Therefore, Southern Company warrants a cautious stance from the investors.
Freeport-McMoRan shares have gained +21.6% over the past three months against the Zacks Mining - Non Ferrous industry’s decline of -1.4%. The company is conducting exploration activities near existing mines to expand reserves. The Zacks analyst believes that the company is expected to gain from progress in exploration activities that will boost production capacity.
Freeport’s Lone Star project provides additional upside. The company is also well-positioned to benefit from automotive electrification, which is positive for copper as electrical vehicles are copper intensive. Higher copper prices are also expected to support its margins. The company's efforts to reduce debt is also encouraging.
However, the company faces headwind from higher energy and freight costs. Higher costs may hurt its margins. The recent weakness in copper demand in China amid slowing economic growth is another concern.
Other noteworthy reports we are featuring today include Netflix, Inc. (NFLX), Cenovus Energy Inc (CVE) and Molina Healthcare, Inc. (MOH).
Director of Research
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>